Court says Can Fin Homes Ltd. is not ‘State’; Employee’s Writ Petition Dismissed

Get the full picture - access the original judgement of the court order here

Case Name

Dhananjay Kumar v. Can Fin Homes Ltd. & Ors.(High Court of Chhattisgarh at Bilaspur)

WPS No. 136 of 2025

Date: 23rd April 2025

Key Takeaways

• Can Fin Homes Ltd. is not a ‘State’: The court found that Can Fin Homes Ltd. does not meet the criteria to be considered a ‘State’ or an instrumentality of the State under Article 12 of the Constitution.
• Writ Petition Not Maintainable: Since Can Fin Homes Ltd. is not a ‘State’, the High Court cannot entertain a writ petition against it under Article 226 for employment disputes.
• Shareholding Matters: The court noted that Canara Bank and its subsidiary together hold less than 51% of Can Fin Homes Ltd., so it is not a government company.
• Petitioner Can Seek Other Remedies: The dismissal does not prevent the petitioner from pursuing other legal remedies available under the law.

Issue

Is Can Fin Homes Ltd. a ‘State’ or an instrumentality of the State under Article 12 of the Constitution, making it amenable to writ jurisdiction under Article 226?

Facts

• Parties: Dhananjay Kumar (petitioner) was a Branch Manager at Can Fin Homes Ltd. (respondent).
• Dispute: Kumar was terminated from service by an order dated 01/01/2025. He challenged this order in the High Court, seeking reinstatement.
• Background: Kumar had received several notices for alleged non-performance, responded to them, and was transferred from Raipur to Bhilai. He tendered his resignation during these proceedings, but before it was processed, he was terminated.
• Respondent’s Status: Can Fin Homes Ltd. is a company incorporated under the Companies Act, 1956, with less than 51% shareholding by Canara Bank and its subsidiary.

Arguments

Petitioner (Dhananjay Kumar)

• Challenged the termination as illegal and arbitrary.
• Sought reinstatement as Branch Manager.

Respondents (Can Fin Homes Ltd. & Ors.)

• Argued that the writ petition is not maintainable because Can Fin Homes Ltd. is not a ‘State’ under Article 12.
• Stated that the company is a distinct legal entity, not under deep or pervasive government control.
• Pointed out that Canara Bank and its subsidiary hold only 29.99% of the shares, so it is not a government company.

Key Legal Precedents

1. Pradeep Kumar Biswas v. Indian Institute of Chemical Biology, (2002) 5 SCC 111

• The Supreme Court laid down tests to determine when a corporation is an instrumentality or agency of the government.

2. Shaheed Begum v. Principal, Army School, Secunderabad, 2005 (6) ALD 312

• Andhra Pradesh High Court decision on what constitutes a ‘State’ under Article 12.

3. Ajay Hasia v. Khalid Mujib Sehravardi, (1981) 1 SCC 7222

• The Supreme Court listed several tests for determining whether a body is an instrumentality or agency of the government, such as:
• Entire share capital held by government
• Financial assistance from the State
• Monopoly status
• Deep and pervasive State control
• Functions of public importance
• Transfer of government department to the corporation.

Judgement

• Decision: The High Court dismissed the writ petition as not maintainable.
• Reasoning: The court found that Can Fin Homes Ltd. is not a ‘State’ or an instrumentality of the State under Article 12, based on the shareholding pattern and lack of deep and pervasive government control.
• Orders: The petitioner is free to pursue other remedies as available under the law. No costs were awarded.

FAQs

Q1: Why was the writ petition dismissed?

A: Because Can Fin Homes Ltd. is not considered a ‘State’ or an instrumentality of the State under Article 12, so the High Court cannot entertain a writ petition against it under Article 226 for employment matters.

Q2: What does it mean that Can Fin Homes Ltd. is not a ‘State’?

A: It means the company does not have enough government control or ownership to be treated as a government body for the purposes of constitutional remedies like writ petitions.

Q3: Can the petitioner challenge his termination elsewhere?

A: Yes, the court specifically said the petitioner can pursue other remedies available under the law, such as approaching a civil court or labor tribunal.

Q4: What legal tests did the court use to decide if Can Fin Homes Ltd. is a ‘State’?

A: The court relied on Supreme Court precedents, especially the tests from Ajay Hasia v. Khalid Mujib Sehravardi and Pradeep Kumar Biswas v. Indian Institute of Chemical Biology, which look at factors like government shareholding, control, and the nature of the company’s functions.

Q5: Does this mean no private company can ever be subject to writ jurisdiction?

A: Not necessarily. If a private company is found to be under deep and pervasive government control or performs public functions closely related to government, it could be considered a ‘State’ under Article 12. But in this case, those criteria were not met.